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The “Defense Medical Exam”, Or “DME” – There’s Nothing “Independent” About It

Posted On: April 27, 2016

The “Defense Medical Exam”, Or “DME” – There’s Nothing “Independent” About It

One of the tactics disreputable insurance company use to safeguard their money at all costs is to attack people who have been injured. They do this by forcing them to be examined by dishonest doctors who give false opinions to the jury so as to reduce or eliminate the claim. To many insurance companies, when someone makes a claim, the company wages an all-out war, and will do anything to try to make the injured person look like a liar.

This common insurance company tactic literally “adds insult to injury.” This common defense strategy of sending injured people to doctors who are paid not to give truly objective opinions, but to give false opinions simply to help the insurance company deny valid claims. These experts can include doctors, psychologists, neuropsychologists and many other fields.

The verdict is going to be paid by an insurance company, in almost every case, by the way, even if the company is not being directly sued and nobody talks about insurance during the trial. The insurance company is behind the scenes, pulling the strings and controlling everything that happens in the defense of the case, even though their customer seems to be the one who is being sued and is present in court. Many states have laws forbidding the lawyers from telling the jury that there’s an insurance company involved, or even mentioning the insurance company’s name. See my blog post on that topic here:

There are good and bad people in every field, including both lawyers and doctors. But in a sad and perverse example of bad conduct being rewarded, insurance companies tend to use the same DME doctors over, and over, and over again, because those doctors will give the opinions the insurance company wants, regardless of whether or not it’s the truth.

I want to make it clear that I’m not saying any doctor who does defense exams is a liar. The vast majority of physicians are truthful and honest. But because they’re truthful and honest, many insurance companies use honest doctors infrequently or not at all, preferring instead to repeatedly use doctors who will say exactly what the insurance companies want to hear. Or more accurately, what the insurance company wants the jury to hear.

And to get the jury to think that this doctor really is giving an objective opinion, insurance companies and defense lawyers love to call these “independent medical examinations”, or “IME’s.” The simple truth of it is that this name is completely false, as there is nothing “independent” about it.

Why Would A Doctor Lie?

To be blunt: Money. The amounts these doctors make from insurance companies is off the charts. I’ve seen doctors testify that they make over $1 million a year just from doing defense exams on a part-time basis! That’s $1 million year in addition to the money they make actually treating patients!

These doctors are extremely aware that if they stop giving opinions to help the insurance company deny claims, the company will send this stream of patients to some other doctor, resulting in the doctor’s losing that huge income source.

It amazes some people that doctors would blatantly lie. When I first started practicing law, I didn’t believe it either. But then I saw it. Personally, and firsthand. Again, and again, and again. These doctors are still just people, and people aren’t immune to the lure of easy money. Dishonest DME doctors are people who’ve sold out, and are willing to say anything to keep the gravy train going.

“I Don’t Believe Doctors Would Lie!”

If you’re reading this and saying “That’s not true. You’re exaggerating. Doctors wouldn’t blatantly lie!”, then I strongly urge you to read this:

It’s a detailed account by a lawyer of his cross-examination of a doctor whose examination of an injured person was videotaped. Even though that exam was videotaped, the doctor still blatantly lied in her report. She simply made things up in order to defeat the claim! That webpage even includes a link to the entire word-for-word transcript of the doctor’s testimony, see you can read for yourself just how much this physician falsified what was in her report.

For example, Dr. Griffin said that the injured person had made “statements” to her that “he has been improving” or that “he has improved.” That would clearly help minimize the injury and decrease the potential verdict. But when questioned about exactly when in the videotaped examination the injured person said anything like that, Dr. Griffin couldn’t find it. She said “I don’t know that I can point that out in my notes.” (Pages 105/106) and “Not a quote,” and “You won’t hear it in a quote.” (Pages 112/113).

What’s Supposed to Happen In A DME?

Here’s what’s supposed to happen when an honest physician performs an impartial examination on the part of the defense:

gets a letter from the insurance company or their lawyer asking them to do a defense exam;

is objective and keeps an open mind at all times;

treats the injured person just the same way they would their own patient;

is provided with all of the patient’s medical records;

reads them carefully;

Injured person comes in for an appointment;

carefully takes a complete relevant medical history (just as they would for a patient that they were treating);

only asks questions having to do with the injury, and doesn’t ask questions which are important to the case but unimportant to the medical evaluation (for example, “Which car had the red light?”, etc.)

carefully examines patient, making accurate, complete notes of all of their observations, test results, etc.;

writes a report explaining all of their findings, and giving their opinions.

And if the doctor’s being honest and careful, that is exactly what will happen.

What Happens In A DME If The Doctor Is Dishonest?

If the doctor is one of those ones who is dishonest and being paid to write a report favoring the insurance company/defense no matter what the truth is, here are some things that will frequently happen:

gets a letter from the insurance company or their lawyer asking them to do a defense exam;

is not objective and does not keep an open mind;

views everything in the file in the way most favorable to the insurance company, and never in favor of the patient;

receives less than all of the patient’s medical records;

skims the records, but does not read them carefully;

Injured person comes in for an appointment;

refuses to allow the patient to record or video the examination;

refuses to allow the patient’s lawyer or paralegal to be present;

refuses to allow anyone else who came with the patient to be present;

does not let the patient fill out forms (because then it would create a clear paper trail about what the patient actually said, and take away the Dr.’s ability to put words in the patient’s mouth);

takes a medical history, skewing most things (or everything) towards helping the insurance company (such as by blaming symptoms on older injuries);

may actually lie about what the patient said their symptoms were (either leaving things out or making things up);

may actually lie about what the patient said their history was;

may actually lie about what the patient said about their past medical treatment;

performs a hurried and/or superficial exam;

performs some tests, but will not perform certain tests the doctor thinks that may confirm an injury;

doesn’t record 100% of the results on the tests they did do, frequently only recording the test results when they’re good for the insurance company, and leaving out test results if they’re bad for the insurance company;

may actually lie about what the patient could or couldn’t do in physical tests or the results of the doctor’s examination;

writes a report giving the defendant, their insurance company and defense lawyers fictional excuses to not pay the claim.

What Kinds of Things Will Dishonest DME Doctors Say?

Dishonest DME doctors are very creative in finding things to tell the jury as reasons why the defense/insurance company should win. They generally want to go as far as they possibly can to minimize the injured person’s claim, while still trying to seem like they’re being reasonable. Here are some examples of common dishonest DME doctor claims, all designed to help the defense:

The patient is simply not injured at all;

The patient is injured, but it’s not from the incident which the lawsuit is about, but is instead caused by an earlier incident, or a later incident, or an unrelated disease or condition, or anything else they can come up with;

The patient is not injured and is lying and faking it (sometimes claiming that they can “prove” this is shown by “inconsistent test results” supposedly showing “lack of genuine effort”, or other supposed evidence);

Even though the patient genuinely believes that they’re hurt, it’s all in their head, and they’re actually not hurt at all;

If it’s impossible to claim the person’s not hurt at all, the DME doctor will admit that there actually is an injury, but do everything they can to minimize it, including:

claiming that the injury will somehow get better on its own over time (after the trial’s over, of course);

claiming that even though there is an actual injury, the person is exaggerating their symptoms, and it’s not as bad as they claim;

claiming that because studies have shown that X% of people with this injury say that they are back to normal in Y months, and this patient says s/he isn’t, s/he must not be telling the truth;

claiming that they don’t need any future medical treatment (even though their actual treating doctor says they do);

claiming that while they while they do need future medical treatment, they don’t need as much treatment as they claim, or that the cost of the future medical treatment is less than the amount claimed;

claiming that the cost of future medical treatment should be paid by somebody else, because the injured person has (or will have) Medicaid, or Medicare, or private health insurance, or Obamacare, or Tricare, etc.; and/or

claiming that the cost of future medical treatment should be discounted, because the person will get discounts because the injured person has or will have Medicaid, or Medicare, or private health insurance, or Obamacare, or Tricare, etc.

I’ve even seen cases where insurance company claims that the jury should give the injured person less, because the cost of “lifelong” future medical treatment will be lower than expected, because the injury caused by the defendant has shortened the injured person’s life expectancy!!

Aren’t There Doctors Who Lie In The Injured Person’s Favor?

Unfortunately, yes, there are doctors who lie in favor of the injured person as well. But those doctors are much more easily exposed because the link between the doctor and the injured person’s lawyer can be clearly pointed out a trial. Every time a doctor gets on the stand, the defense attorney will ask the physician “How many times have you testified for this lawyer?” and the jury will hear the answer. If the plaintiff’s lawyer and the crooked doctor are working together to falsely exaggerate a claim, the defense attorney will be able to successfully point out to the jury how they’ve worked together 50 or 100 times.

But the opposite is not true. As described above, Missouri law generally prohibits anyone from telling the jury that there’s insurance involved in the case. So, the injured person’s lawyer typically isn’t allowed to point out that Dr. Johnson was hired by Allstate Insurance Company in this case, and that he’s been hired by Allstate 100 times before. While it is proper to get the doctor to admit that 90% of the doctor’s court testimony is on behalf of “defendants,” that testimony doesn’t really forcefully make the point that this doctor has deep financial ties to the insurance company defending the case.

And asking the defense doctor “How many times have you testified for this defense lawyer?” really doesn’t make the point, because the common link isn’t the defense attorney, but is instead the particular insurance company, which may use dozens or even hundreds of different defense law firms.

Summary

In summary, there is nothing “independent” about “independent medical examinations,” precisely because the typical defense Dr. makes huge amounts of money from insurance companies by doing these examinations and testifying at trial. While some doctors doing defense exams are fair and honest, a significant portion of them are done by doctors willing to say anything to convince jurors, all to save money for the insurance company that’s paying them.

Why Missouri Law Prohibits Lawyers From Telling Juries That There’s Insurance To Pay Their Verdict

Posted On: April 27, 2016

Missouri law actually prevents judges from telling juries that there is insurance involved in a lawsuit. The general basis for this rule is because they don’t want jurors to exaggerate verdicts just because there’s insurance involved. Jurors aren’t stupid, of course, and know that we’re all required to carry car insurance, and generally carry other insurance, too.

Unfortunately, by hiding the existence of insurance from the jury, jurors tend to specifically believe that there is no insurance available, and as a result frequently actually reduce their verdict to less than what they think is fair based on the incorrect assumption that the person who is being sued will have to pay it out of their own pocket.

I’ve had jurors ask me after a trial’s over “Why didn’t you sue the insurance company instead of suing the driver?” And the answer of course is: “Because Missouri law won’t let me! I wanted to tell you that there’s insurance to pay the verdict, but the judge wouldn’t allow me to.”

Hypothetical Example: Suppose Mr. Smith works for XYZ Corporation and is driving one of their corporate vehicles during his work shift one day. Allstate Insurance Company insured XYZ Corporation and its vehicles. Mr. Smith isn’t paying attention and crashes into another vehicle, injuring Mr. Johnson.

Under Missouri law, Mr. Johnson can only make claims against (i) the person who hurt him (Mr. Smith) and (ii) the business that Mr. Smith was actively working for at the time of the incident (XYZ Corporation).

But Mr. Johnson is not allowed to sue Allstate: Allstate wasn’t driving the car, and Mr. Smith was not actively working for Allstate at the time of the crash.

Nobody likes to read insurance policies (including me). But if you ever actually do read one, you’ll see that when you really reduce a car insurance policy to its bare minimum, it basically says:

If someone sues you (Driver) because of the way you drove your car, we (Insurance Company) will write a check to pay the full amount of the jury’s verdict, up to the maximum amount of the insurance policy you bought.

And that essentially sums it up: the person who gets sued is the person or company that caused (or partially caused) the injury, not the insurance company. The injured person can’t sue the insurance company, because the insurance company didn’t cause the injury.

Even though everybody in the courtroom except the jurors knows that there is insurance in the case, the judge forbids the injured person’s lawyer from telling the jury that there is insurance.

Because jurors don’t know how to the system works and tend to give the injured person less when they believe that there is no insurance, I think this rule is very unfair and should be changed. Jurors are intelligent people, and we should trust them to issue a fair verdict, regardless of whether or not they know an insurance company will pay the verdict amount. But withholding information from them doesn’t make sense.

United States Federal Government Issues $94 Million In Healthcare Grants To Treat Growing Problem Of Opioid Addiction

Posted On: March 15, 2016

The United States Department of Health and Human Services has called the opioid epidemic one of the most pressing public health issues in the United States. To help counter that epidemic, the federal government is issuing $94 million in healthcare grants to 271 health centers throughout the country to assist those centers provide treatment to those addicted to drugs. One of those grants is $406,000 to the Jordan Valley Community Health Center here in Springfield, Missouri.

Though there is a common perception that drug addiction is a problem faced only by those taking drugs to get high, the fact is that drug addiction very frequently is the result of long-term legal use of prescribed medications given to counteract pain. The stereotype most of us have in our minds when they think of a drug addict is far from the statistical reality of what a drug addict actually looks like. For instance, it is common for people with back injuries to be given prescriptions for narcotics and continue taking them on a long-term basis. Many times the patient becomes addicted to those painkillers without even realizing it. By the time they realize that they have a problem, they’re already addicted.

One example of a drug addict who is completely different from our perceptions is Rush Limbaugh. He became addicted to prescription medications, all while continuing to work at his high profile radio show with no one suspecting that he was addicted to drugs. Another is Betty Ford, the former First Lady, whose dependence on drugs and alcohol led her to establish the Betty Ford Center in 1982.

Addiction to narcotics is very difficult to break and often leads to drug overdoses. Because of the epidemic over use of opioids, it is become a high-profile issue frequently discussed by the 2016 presidential candidates. The television news show “60 Minutes” has profiled the growing use of opioid addiction an overdose in the United States in a piece entitled “Heroin in the Heartland” which can be read and viewed here.

The eye-opening aspect of the piece is how mainstream and average these drug users are. The parents of many of these high school students never even considered the possibility that their children were addicted to drugs until the problem had escalated to dangerous levels. It also included group interviews with parents of victims of drug overdose, who stressed how they thought they were immune because their children didn’t come anywhere near the caricature of a drug addict that we all have in the back of our minds.

We applaud the growing knowledge meant that opioid abuse is a problem which we as a society must recognize and treat, and these grants, including the grant to the Jordan Valley Community Health Center here in Springfield, are a very good step in that direction.

These grants will be used to focus on three main areas to help the opioid crisis. Those areas are:

Providing training and educational resources, including updated prescriber guidelines, to assist health professionals in making informed prescribing decisions and address the over-prescribing of opioids.

Increasing use of naloxone, as well as continuing to support the development and distribution of the life-saving drug, to help reduce the number of deaths associated with prescription opioid and heroin overdose.

Expanding the use of Medication-Assisted Treatment, a comprehensive way to address the needs of individuals that combines the use of medication with counseling and behavioral therapies to treat substance use disorders.

What Is A Whistleblower And What Protections Do They Have Against Employment Discrimination?

Posted On: March 7, 2016

“Whistleblower” is a term used to describe someone who reports their employer (or someone else employed at their company) for improper or illegal practices. The behavior a whistleblower might report includes things like illegally dumping toxic chemicals, illegal discrimination in employment, illegally overcharging customers, Medicaid and Medicare fraud, and so on.

As in most other states, the general rule in Missouri is that an employer may fire an employee at any time, for any reason or no reason at all. This is called “employment at will.” But there are exceptions to the employment at will doctrine. The most basic exception is that an employer cannot fire an employee without consequences if the employee has an employment contract which prevents that. Another exception to the employment at will doctrine is that an employer cannot make employment discrimination decisions on the basis of race or other specifically illegal factors.

Missouri also has a “public policy” exception to the at will employment doctrine. This is a catch-all concept that that an employer cannot fire an employee for a reason which violates Missouri’s public policy. That’s basically another way of saying that the state of Missouri has an interest in encouraging the employee’s behavior.

For example, consider a situation where an employer is being investigated by the government for illegal conduct. In order to keep its illegal conduct hidden, the employer tells all of the employees that if they’re contacted by a state investigator, they should cover it up and lie about what happened. One employee, Jane Doe, refuses to lie and when she’s served with a subpoena, she tells the truth to the investigators, exposing the employer’s illegal conduct. The employer is angry and fires Jane for testifying against them.

Because the state of Missouri has an interest in making sure everyone tells the truth when they’re under oath and because perjury is a criminal act, this situation is an exception to the at-will employment rule. Jane very likely has a strong claim for damages against the company.

Retaliation against whistleblowers goes on all the time, unfortunately. Most people never see it, so they have no idea how common, or damaging, it really is. The truth is that when an employee goes against its employer’s wishes, most employers will fire that person, whether it’s illegal or not.

Click here to read an article from the Washington Post about how the United States government retaliated against a federal law enforcement officer for exposing the government’s irresponsible actions. This honorable agent did the right thing in an effort to protect the United States public. Yet he was both fired and blackballed in the industry because of what he did. but he did not give up, and took the government all the way to the United States Supreme Court, where he won. The Supreme Court held that what he did was protected conduct, and held the government accountable.

This case also illustrates how an employer can, and frequently will, destroy the career of someone they dislike, and how common it is for an employee to get blackballed in a field or industry, in this case law enforcement.

It’s very important to note that with many employment discrimination claims there are extremely short deadlines and statutes of limitations. To make things even more complicated, it can be very confusing to properly calculate when these deadlines start and end. For instance, a complaint of illegal discrimination under the Missouri Human Rights Act generally must be filed with the Missouri Commission on Human Rights within 180 days after the act complained of. But there is an exception to that rule under the “continuing violation” doctrine.

Missouri courts have stated:

Under the “continuing violation” theory, a plaintiff may pursue a claim for an event that occurred prior to the 180-day statute of limitations for filing a claim of discrimination with the MCHR if the plaintiff can demonstrate that the event is “part of an ongoing practice or pattern of discrimination” by the employer. Pollock, 11 S.W.3d at 763.

To take advantage of the “continuing violation” theory, a plaintiff must satisfy a two-part test: (i) “demonstrate that at least one act occurred within the filing period”; and (ii) show that the current claim of discrimination is part of “a series of interrelated events, rather than isolated or sporadic acts of intentional discrimination.” Id. If the plaintiff proves both, then “the 180-day filing period becomes irrelevant . . . [and] [h]e may then offer evidence of the entire continuing violation.” Id.

Tisch v. DST Systems, WD73454 (Mo. App., W.D. 2012)

Due to the complexity of these calculations, if you believe you’ve been wrongfully discriminated against or fired, you should get an experienced attorney involved as soon as possible to make sure you don’t accidentally let your rights expire. For instance, with many employment discrimination claims, you’re required to file a proper and timely written “charge of discrimination” with an government agency before you’re allowed to sue. Failure to properly do that means that your lawsuit will be dismissed and you’ll get nothing.

If you’ve been retaliated against by your employer because you are complained about illegal or improper conduct, please contact us at Curran Law Firm at 417-823-7500 or submit an inquiry to us through our website at CurranLawFirm.com.

A Basic Explanation For Construction Workers On The Missouri Prevailing Wage Law: How To Tell If Your Employer Is Illegally Underpaying You, And What To Do About It

Posted On: February 15, 2016

Missouri, like many states and the federal government, has what’s known as a prevailing wage law. The basic idea is that when the government is paying for public works construction projects in Missouri (such as bridges, roads, and government buildings), it’s in everyone’s interest for the workers on that project to be paid well, because it will help the economy in general. Missouri’s prevailing wage law applies to the state government, and also applies to all Missouri cities and counties. (Missouri’s prevailing wage laws are set forth at Missouri Statute Section 290.210 through 290.340. If you want to read those laws, click here and scroll down to start at Section 210.)

Missouri’s Prevailing Wage Law establishes minimum wage rates that must be paid to “workmen and mechanics” for each classification of worker on that government job. It does not apply to office workers, and only applies to the workers actually doing the work at the jobsite.

It’s important to understand that while the Prevailing Wage laws require high houlry rates to be paid to the workers, that money is NOT coming from the contractor’s own pockets. Instead, the government is paying those funds, by giving it to the contractor to hold, and trusting that the contractor will pay all of that money to the workers, as the contract requires. The contractor is not allowed to keep any of it. The contractors are already making their own separate profits on these government jobs under the other sections of the contract, so there’s never any legitimate reason to not pay the full hourly rate out to the workers.

The way it works is that when Missouri’s government is paying for a public works project, the laws specifies a procedure for certain minimum wages to be paid to specific workers involved in that project. The laws require the Missouri Department of Labor to set those specific pay rates for the different building trades involved in that particular project. These rates are usually very generous, sometimes running up to $40 per hour and more.

Contractors interested in bidding on the project sign promises that they will actually pay their workers that minimum wage amount. The law says that the contractors must pay that amount to their workers (although they don’t have to pay at all in cash). The law says that when figuring out if the contractor met the minimum prevailing wage requirements, you add up both (i) the cash payments made to the worker and (ii) the actual cost of the non-cash “bona fide” fringe benefits paid to the worker. “Bona fide” means “good faith,” and the employer only gets a credit for the actual cost of fringe benefits to the employee if they’re made is good faith. (Sometimes they’re not, and are simply attempts to keep the money – see below.)

For example, if the prevailing wage laws give a contractor $40 per hour to pay an electrician, the employer is meeting that requirement if it actually pays the contractor either one of the following pay packages:

$40 per hour in the electrician’s check; or

$30 per hour in the electrician’s check, plus an additional $10 per hour that the contractor is paying into that employee’s individual 401(k) plan.

But a contractor in that situation would be violating the prevailing wage law if they pay the electrician $30 per hour and then give the employee health insurance that only cost the employer an average of $5 per hour, because that only adds up to $35 per hour.

Procedures Contractors Go Through To Get Paid On Prevailing Wage Contracts

Contractors typically don’t get paid all at once on construction jobs, but instead get paid in phases. In order to get each installment payment, the contractors have to file with the government written statements swearing under penalty of perjury that they have passed through to the “workmen and mechanics” on that particular job all of the money that they have been given by the government, and have fully complied with all of the prevailing wage laws.

What Happens If The Employer Violates Missouri’s Prevailing Wage Law?

Missouri’s prevailing wage law provides two different remedies if a contractor fails to pay the full amount to its workmen and mechanics.

The first remedy is that a worker who got shortchanged can sue the contractor. Because the money was already paid to the contractor by the government and the contractor wrongfully kept it, Missouri law says that when a worker has been shortchanged, the contractor has to pay that worker:

twice the amount the worker was shortchanged; plus

all of the worker’s attorney’s fees; plus

interest.

The second remedy is that a contractor who violates these laws can be criminally charged and can go to jail. In fact, if a contractor is breaking this law, they’re probably committing many different violations, because each time they submit a signed statement falsely representing that they have fully complied with Missouri’s prevailing wage law, they have also committed perjury.

What Are Some Of The Ways That Contractors Breaking Missouri’s Prevailing Wage Laws Do It?

The vast majority of the contractors on Missouri’s public works projects are ethical, law-abiding people who do the right thing and pay their workers the right amounts. But there are always some bad apples, and unfortunately some contractors are determined to cheat their employees by keeping for themselves the money the government gave them to pay to the workers. This is outright theft of money from all of us.

The Simple Way – Just Lie. Some contractors who want to cheat their workers do it plain and simple. They just pay their workers less than the amounts required by the contract, and simply sign false statements swearing that they have paid the correct amount. This is the low-tech way to commit fraud.

To catch people who do this, the government occasionally audits the contractors and looks at the workers’ pay stubs to see whether the contractor paid the right amounts. If this unsophisticated scheme is used, a basic audit will expose the fraud.

But more sophisticated cheaters know that audits sometimes occur and they don’t want to take the chance that an audit will catch them. So they instead concoct complicated structures to try to conceal what is really happening.

Illegal Rebate Schemes – One technique that has been used in the past is a rebate scheme. Suppose that the contractor is required to pay $40 per hour to a worker. On that worker’s paycheck, the contractor will put down 40 hours at $40 per hour, for a total gross paycheck of $1,600. But then the contractor takes it back by making an overblown and improper deduction from the worker’s pay paycheck, simply to take back a large chunk of that money. For instance, a contractor who requires all employees to ride on the company truck to the jobsite might create a charge to workers for $50 per ride each way. Those 10 rides per week lead to a deduction of $500 on that paycheck, so the worker only gets $1,100 instead of $1,600. They just stole $500 from the State of Missouri, from the worker, and from me and you.

The $50 per ride is a ridiculous deduction, but it covers them in case they get audited. In an audit, it will look like the contractor actually paid the required $40 per hour, even though they still really cheated the employee out of a big part of it. Many of these audits of contractors are very superficial and just look at the gross hourly rate paid, so they don’t catch underhanded tricks like these.

To make sure contractors don’t get away with schemes like this, there’s a specific provision in the Missouri prevailing wage law that makes this type of deduction illegal. So while this kind of scheme might slide past an auditor, an attorney for the employees could file a successful lawsuit against this employer. And because of the double damages plus attorney’s fees provisions in the prevailing wage law, the recovery on behalf of a class of those cheated employees could be very significant.

Illegal “Benefits” Schemes – Some even more sophisticated contractors have gone to great lengths to concoct even more complex schemes that at first glance appear to be legal but in reality are nothing more than ways to cheat the employees out of their prevailing wage pay.

One such scheme is where an employer claims on paper to pay its prevailing wage workers the correct hourly rate, but then instead of paying it to the employee sends a huge portion of those workers’ pay into what is essentially an insurance trust that provides benefits to all of the contractors’ employees, even the ones who work in the office and are not entitled to prevailing wage benefits. This scheme has the potential of shifting the employer’s insurance costs for its office workers onto the backs of the prevailing wage workers, wrongfully depriving them of the amount they’re supposed to get. But on its face it can seem legal, until a lawyer really carefully digs into what’s going on.

What to Do If You Think You’re Being Paid Less Than You’re Supposed To Get

At Curran Law Firm, we are proud to represent workers who have been the victims of contractors’ illegal prevailing wage schemes. If you’d like us to take a look at your situation to see whether your employer violated the prevailing wage laws (or any other employment laws), please call us at 417-823-7500. We’ll be happy to discuss your situation with you at no cost, to help you understand whether or not you have been paid the proper amounts.

If your employer has violated these laws, we represent workers against those employers on a contingent fee basis, meaning that you do not have to pay us any money upfront, and only pay us an attorney’s fee out of any recovery in the case.

You should also be aware that it can make a lot of economic sense to pursue your rights even if you only got cheated out of a small dollar amount. Lawsuits can be expensive, and it may not make sense to file a lawsuit if there’s only a small dollar amount in issue. But situations like this are the very reason why class actions were invented. It makes no sense to let someone who’s stealing fifty cents from 100,000 people get away with it. But that’s still $50,000 that they stole! That person should be stopped. But no individual victim has an economic incentive to spend large amounts of money just to get back fifty cents. Class actions let an attorney file one lawsuit on behalf of everyone who lost money, and they’re an important tool that can be used to hold wrongdoers accountable even when each victim has only a small dollar amount at stake.

States Should Reform “Structured Settlement Funding” Company Regulations Because The Industry Routinely Takes Advantage Of Injury Victims Through Unfair Financial Transactions, Hiding Unfairness Through Complexity

Posted On: January 25, 2016

Late-night television viewers are no doubt familiar with commercials for a financial company where someone leans out a window and screams “It’s My Money, And I Need It Now!” The announcer then helpfully advises the viewer that if the viewer is owed a future payment stream from an annuity or insurance company, the financial company will be happy to buy some or all of their future payments in exchange for giving the viewer a lump sum payment today.

What those commercials don’t say, however, is that these are incredibly bad transactions for the viewer, who typically gets only pennies on the dollar for the payments they’re selling.

While many people might not realize who the target viewer is, these companies are looking for people who have been seriously injured in motor vehicle and other accidents and who have settled their claims by using a “structured settlement.” A “structured settlement” is a financial transaction where instead of getting a single lump sum payment, the injured person is issued an annuity. An annuity is a financial contract in which an insurance company promises to make a stream of payments to someone over many years, typically decades. One of the features of an annuity is that once the settlement is done, the payment dates and amounts are unchangeable; most annuity issuers will not even consider changing payment dates or amounts.

Structured settlements have numerous advantages, one of which is enabling the person to accumulate interest tax-free. Another advantage is that by having the future payments fixed, the injured person can engage in intelligent financial planning since they know when and how much they’ll be paid in the future. These fixed payment dates and amounts also tend to prevent an injured person from spending the money faster than they get it, which is generally beneficial to the recipient.

As a plaintiff’s attorney who has participated in many cases which involved the use of structured settlements, I can tell you that I have never met a client who understood what a structured settlement was before I introduce the concept to them. Almost all of these people are unfamiliar with the financial concepts involved in a structured settlement, including discounting future payment streams to present value using a discount rate. They simply lack the financial knowledge necessary to analyze these transactions and determine whether or not they’re reasonable.

Sometimes, however, the injured person changes their mind and decides that even though they agreed upon the payment timetable when they settled the case, they want to get the hands on the rest of their money sooner. But the insurance company that issued the annuity typically ties that money up in long-term investments as soon as the ink is dry on the settlement papers, so they’re unwilling to renegotiate the payment timetable.

Unfortunately, unscrupulous companies over the last 20 or so years have realized that there are many financially unsophisticated injury victims who own these annuities, with no understanding of what they’re actually worth today. So these companies spend huge amounts of money on advertising to make everyone aware that they’re willing to buy those future payment streams, all without telling these people that they’re only going to get pennies on the dollar for what they’re selling.

For example, if I owned an annuity today that promise to pay me $1,000 on January 1 of every year for the next 10 years, it’s very simple to calculate how much that income stream is worth today. To do that, you look at current interest rates and, among other factors, the financial strength of the company promising to make those payments to me. After all, promises made by a very secure insurance company are much stronger and more valuable and trustworthy than promises made by an insurance company that’s teetering on the edge of bankruptcy.

Some people may think that such an annuity is worth $10,000 (10 years times $1000 per year). But that’s actually incorrect, because that doesn’t take into account the time value of money. This annuity is actually worth less than $10,000, because of the interest we could earn on that amount during the 10 years it takes to pay it out.

Let’s assume that we use a 5% discount rate (which is similar to an interest rate). Under that assumption, that annuity is worth $7,721.73 today. That means that if you can invest $7,721.73 at an annual interest rate of 5%, you can withdraw $1,000 every January 1 for the next 10 years, and that when you make that 10th withdrawal, you will have a zero balance in that account. That means that the interest you are earning is just enough make those payments, and no more.

If interest rates are lower, it will mean that less interest will be earned over that time period, and more money would need to be deposited at the beginning to reach that balance. For instance, if we use a 2% discount rate instead of a 5% discount rate, that annuity is actually worth $8,982.59, over $1200 more. So with annuities, lower interest rates ( like we have today), mean that annuities are actually worth more, not less.

These “structured settlement funding” companies are extremely sophisticated, and understand very clearly the strength of the insurance company that issued the annuity, and exactly what they would be purchasing from the seller in this transaction.

So what they typically do in these situations is offer absurdly low purchase prices to the recipient. I’ve seen numerous cases where a structured settlement funding company offers an annuity owner less than 15% of what the annuity is worth. To use the example of the “$10,000 annuity” described above, they’re not offering 15% of the $10,000, which would be $1,500. instead, they’re offering less than 15% of the discounted value of the annuity. So for the example cited above, with a 5% discount rate, they would only be offering 15% of the $7721.73.

In such a transaction, therefore, the annuity owner would be selling 10 payments of $1,000 each, and they would only be paid a total of $1,158.26. They could get almost that same amount simply by waiting one year for the first payment of $1,000. In essence, the funding company in this example is buying nine additional payments of $1,000 each for a total purchase price of about $200.

To see just how unfair this transaction really is, now let’s analyze this transaction from the side of the coin. The structured settlement funding company is putting in $1,158.26, and getting out 10 separate payments of $1,000 each, spread out over 10 years. What is the rate of return they’re getting on this money? How good of an investment is this for them?

In this example, the funding company’s profit on this transaction comes to OVER 86% PER YEAR, every year for 10 years.

To put that in perspective, as of today (January 25, 2016), the well-recognized financial website BankRate.com says that 5-year CD yields, from FDIC-insured banks, are averaging 0.84%. In the realistic example explained above, the structured settlement funding company is earning 100 times the interest a bank would pay them for their vast.

In plain English, this is outrageously unfair, and the term “scam” is a fair description of this transaction.

I’ve explained many times to potential clients how badly they are being taken advantage of in these transactions. not once have I ever explain this to someone and they think it’s fair. Unfortunately, I’ve also seen that many times in these situations, even after having had their eyes opened to how badly they are being taken advantage of, the annuity holder still doesn’t realize that in fact they do have other options to pursue.

For example, one other option is to go to a bank and get a loan, using the annuity payment stream as collateral. A bank is not going alone out money at the rate that it pays for CD investments, but the borrower would pay far less to a bank than they end up paying to a structured settlement funding company.

Many states have laws requiring the structured settlement transactions to be approved by a judge. In large part, these are meaningless, rubberstamp court appearances. I have on several occasions happened to be in court when an unrepresented person appears with the funding companies attorney seeking a judge’s approval of the transaction. I’ve seen judges clearly attempt to talk people out of doing this, by explaining in the most harsh terms the judge would come up with how badly they were being taken advantage of. (By the way, many states have laws requiring judges to approve these transactions if they find the seller understands the transaction, regardless of whether or not the judge thinks the transaction is fair. Those kinds of laws, which prevent judges from prohibiting unfair transactions, are the result of lobbying and campaign contributions by settlement funding companies.)

Unfortunately, many times the injured person still wants to go ahead with it, and in those situations it was always clear to me that the person simply didn’t understand exactly what was happening, and realize that they in fact had other options.

The Washington Post recently ran a series of articles exposing how these settlement funding companies operate, including exposing a practice of manipulating the judicial system by filing thousands of cases in favorable counties, regardless of where the parties involved in that case live. The most recent article can be seen here. That page has links to further explanations and prior articles.

The long and short of it is that the current practices of settlement funding companies can and should be outlawed. While these companies can serve valid purposes and they do provide assistance to some people in some situations, they do so by taking outrageous and unfair advantage of their customers, creating unconscionable internal rates of return for the funding companies.

While banks and loan companies making loans for car purchases, home mortgages and the like are required under federal law to give the borrower specific information setting forth in very plain English how much they’re paying an interest, those requirements do not apply to settlement funding companies. While settlement funding companies typically do disclose the relevant information to the unsophisticated buyer, they also typically do that buried in a mess of legalese, hidden in the middle of a dense 30-page document with language only a lawyer can understand. I have yet to see a funding company give the relevant financial information in a single one-page form similar to the way the law requires banks and lenders to do it.

At a minimum, to protect our citizens from this kind of predatory transaction, I urge each state to promptly enact legislation doing all of the following:

creating tighter venue requirements so that settlement funding companies can’t judge-shop by filing all of their approval suits before friendly judges who rubber-stamp their approvals;

mandating the use of disclosure forms similar to the Federal “Truth In Lending” Act which lay out in a single page the important numbers for a transaction including how much the customers paying to the settlement funding company, and the internal rate of return that the settlement funding company is making on the transaction; and

mandating that settlement funding company advertisements and commercials give useful and realistic disclaimers.

A trove of e-mails from Takata, a major airbag manufacturer whose products have been blamed for many deaths, were recently unsealed from court order. Those emails clearly show that the airbag manufacturer engaged in data manipulation relating to the consistency and quality of its airbags and their inflators. Many lawsuits against Takata claim that its airbags were defective because instead of inflating in a quick but controlled way, they actually exploded, causing shrapnel injuries to vehicle occupants.

One of the engineers e-mails was entitled “Happy Manipulating!!!” That e-mail was sent by a Takata airbag engineer named Bob Schubert on July 6, 2006, and refers to results of airbag tests.

While many business organizations complain about frivolous lawsuits, the fact remains that lawsuits are one of the most important tools which society has to hold manufacturers accountable for the products they sell. Without product liability lawsuits, companies like Takata would have no financial incentive to reform their ways and improve their products.

Additionally, product liability lawsuits are the way that systemic defects get exposed. Takata is only getting the press it is currently receiving because of the efforts of plaintiff’s lawyers in several lawsuits which first brought these airbag defects to light. Similarly, General Motors recent massive recalls over its defective ignition switches was only exposed through wrongful death lawsuits filed by the families of people who died in crashes caused by the defect. It’s also important to note that General Motors (like the vast majority of companies in this situation) repeatedly denied that its products were defective until the evidence unearthed by plaintiffs’ lawyers became overwhelming. (Even at that point, General Motors tried to avoid liability by hiding behind its recent bankruptcy, claiming that the bankruptcy process had terminated the injury victims’ rights to sue.)

An article from the New York Times giving extensive details on the recalls, e-mails and the whole sordid history of the Takata episode can be found here.

U.S. Supreme Court Strikes Down Florida Death Penalty Law Because It Deprives Citizens Of Right To A Jury Trial

Posted On: January 13, 2016

One of the most fundamental constitutional rights belonging to citizens of the United States is the right to a jury trial. Both the United States Constitution and the Missouri Constitution guarantee the right to a jury trial to every citizen, regardless of whether the trial is for a criminal charge or a civil case. (A civil case is any case that’s not seeking criminal penalties, and they typically involve lawsuits seeking money damages.)

This week, the United States Supreme Court struck down as unconstitutional Florida’s law concerning the application of the death penalty. They did so not because the death penalty itself was unconstitutional, but because of the way Florida’s system applied it. Under Florida’s system, the jury only made a recommendation to the judge as to whether or not the death penalty should be applied, and the judge then made the ultimate decision on whether or not the defendant should be executed. The Supreme Court held that the United States Constitution requires the jury, not the judge, to make the actual decision. Because Florida’s system had the jury only making a recommendation instead of actually making the decision, their laws deprived the defendant of his right to a jury trial. The court held that the right to a jury trial is meaningless if the jury’s decision can be ignored.

“We hold this sentencing scheme unconstitutional. The Sixth Amendment requires a jury, not a judge, to find each fact necessary to impose a sentence of death. A jury’s recommendation is not enough.”

– United States Supreme Court, Hurst v. Florida (2016)

Attack On Our Right to Jury Trial in Civil Cases

The right to a jury trial was viewed by our Founding Fathers as one of our most fundamental bedrock rights, and necessary to protect all of our other rights. That’s why the right is spelled out twice in the U. S. Constitution (once for criminal trials in the Sixth Amendment, and once for civil trials in the Seventh Amendment). Presidents from Thomas Jefferson all the way through Abraham Lincoln and since have explained how important that right is:

I consider trial by jury as the only anchor ever yet imagined by man, by which a government can be held to the principles of its constitution.”

– Thomas Jefferson to Thomas Paine, 1789.

“Why should there not be a patient confidence in the ultimate justice of the people? Is there any better or equal hope in the world?”
– Abraham Lincoln

Regardless of whether you’re in favor of or opposed to the death penalty, I think we can all agree that all of our constitutional rights should be protected. As I’ve written about before on this blog, there is a concerted effort on the part of insurance companies and large businesses to deprive people of their constitutional rights to a jury trial when filing civil cases.

The Founding Fathers wanted juries because they wanted the People to have the power to fashion justice as they saw fit. That equalizing, unlimited power of the jury is exactly what the companies fear, and why they seek to limit it.

“In the ‘David versus Goliath’ fights that go on in courthouses around our country today when an injured person sues someone insured by a deep-pocketed insurance company with almost unlimited assets, Goliath is trying to take away David’s sling and rock by limiting what a jury of ordinary citizens can do. That’s completely un-American and contrary to our system of laws.”

– Robert Curran

In 2012, the Missouri Supreme Court struck down as unconstitutional Missouri’s medical negligence laws for the very same reason. Missouri law had said that when someone sues for medical negligence, the jury decides whether or not the doctor or hospital was careless or not, and if so how much the verdict should be. But those laws then required the court to ignore the jury’s decision if the jury’s verdict included gave more than a “one-size-fits-all” fixed dollar amount decided years earlier by the Missouri legislature (called a “cap”), and reduce the amount of the verdict to the dollar amount the legislature decided upon, without knowing any of the facts of the case. As explained by the Supreme Court, those laws were unconstitutional because the right to a jury trial is meaningless if the judge then disregards what the jury decides.

“This Court holds that section 538.210 [the medical negligence “cap” law] is unconstitutional to the extent that it infringes on the jury’s constitutionally protected purpose of determining the amount of damages sustained by an injured party.”

One absurd aspect of Missouri medical negligence laws, then and now, is that the law specifically says that no one is allowed to actually tell the jury that the cap exists, or that their decision on the size of their verdict is essentially meaningless above a certain dollar amount, because the court is required by law to ignore it. The judge tells the jury throughout the trial that everything is in their hands, and that they’re most important people in the justice system. But the reality of it is that the legislature gave our rights to satisfy the big businesses that fear juries. The laws don’t trust the people of this state to actually issue just and proper decisions, and have taken those rights away from the People.

I’m not sure which is worse: that the legislature won’t trust juries to make the right decision, or that the legislature wants to make sure that the jury doesn’t know that the legislature won’t trust them.

The Missouri legislature has since enacted a replacement set of laws trying to do an end run around the constitutional right to a jury trial, using a complex legal mechanism. Unfortunately, that mechanism may work. It will be at least several years before the Missouri Supreme Court is asked to decide the constitutionality of Missouri’s new medical negligence laws, which contain a similar limitation where the legislature decides on a fixed dollar amount as being sufficient, without having any idea what the case is about.

Let’s hope that when it comes before the Missouri Supreme Court in the future, they again put the decision-making power in the hands of the People, instead of big businesses and the politicians.

Missouri Law On Punitive Damages

Posted On: December 28, 2015

In Missouri, there are two general types of damages which a person filing a lawsuit can seek. The first is called “compensatory” damages. Compensatory damages, as its name implies, are designed to compensate the person for their actual losses. Examples of compensatory damages include the cost of repairing a vehicle involved in a crash. In a lawsuit involving a personal injury, examples of compensatory damage items include medical bills, lost wages, and compensating the person for their “pain and suffering” caused by the injury.

The second type of damages is called “punitive” damages. Punitive damages are designed to punish the wrongdoer for their conduct. Punitive damages are not designed to compensate the injured person. Instead, their purpose is to make an example of the wrongdoer both (i) to prevent that person from repeating that conduct in the future, and (ii) to make it known to the entire community that this type of conduct will not be tolerated, and deter others from doing the same type of thing.

Punitive damages have a long history, going all the back to the Bible, and earlier. The award of punitive-type damages was common in early legal systems, and was mentioned in religious law. Punitive damages were provided for in Babylonian law nearly 4,000 years ago in the Code of Hammurabi, the Hittite Laws of about 1,400 B.C., the Hebrew Covenant Code of Mosaic Law of about 1,200 B.C., and in the Hindu Code of Manu of about 200 B.C. See Owen, Punitive Damages in Product Liability Litigation, 74 Mich. L. Rev. 1257, 1262 n17 (1976).

For example, the Bible says, at Exodus 22:1:

“If a man steals an ox or sheep and slaughters it or sells it, he is to repay five oxen for the ox and four sheep for the sheep.”

That’s punitive damages – making the wrongdoer pay back more than what they took.

The vast majority of lawsuits don’t involve claims for punitive damages. Though punitive damages tend to get a lot of attention in the press, they are in fact rarely assessed, which is why it’s newsworthy when it happens.

In Missouri, a person who’s suing can get punitive damages only when they prove that the defendant intentionally committed a wrongful act without just cause or excuse. If the defendant intentionally does a wrongful act and knows at the time the act is wrongful, it is done wantonly and with a bad motive. Evil intent may also be implied from reckless disregard of another’s rights and interests.

Missouri has several laws specifically dealing with punitive damages in lawsuits. For instance, one law (Section 510.265) says the courts must reduce the dollar amount of the jury’s decision on punitive damages to a number which is no more than five times the amount of compensatory damages, or $500,000, whichever is higher. The Missouri Supreme Court has held that because Section 510.265 requires the court to ignore the jury’s decision on the amount of punitive damages, that law is unconstitutional in some situations because it deprives the plaintiff of a jury trial. The rationale is that the Constitution’s right to a jury trial is meaningless if the jury’s decision is going to be ignored or modified.

In Missouri, the plaintiff does not get to keep all of the punitive damages paid by the defendant. Missouri law requires that 50% of punitive damages paid by a defendant be turned over to the State of Missouri. See Section 537.067.3.

A Kansas City used car dealer aggressively advertised that it would sell cars for a fixed payment of $49 per month. A 77-year-old widow went to the car dealership. She specifically told the dealer that she could only afford the $49 per month car payment, and that her income was $920 per month. They assured her that the total payment was going to be $49 per month, for five years. The dealership then created fraudulent bank loan papers in her name saying that her income was $18,000 per month, and tricked her into signing papers that contained very different terms from what they promised her.

After less than a year, her payments went up to $387.45 a month. Because she couldn’t afford to pay that, she fell behind in her payments and the bank repossessed her vehicle. She sued the car dealership for fraud, seeking both compensatory and punitive damages.

At trial, the widow testified about her dealings with this car dealership. She also had two other people testify who were similarly misled by the car dealership. She also presented evidence of 73 complaints against this car dealer in both Kansas and Missouri.

The jury was apparently outraged at the car dealership based on the evidence it heard, because it issued a verdict of $25,000 in compensatory damages for the widow, and an additional $1 million in punitive damages.

It was clear that under the facts of this case, the jury believed that the car dealership had defrauded many, many people. Only one of them sued the dealership and went all the way through trial. There are a lot of reasons why so few cases reach trial. One of the biggest is the fact that people who have been defrauded are embarrassed when they realize they’ve been tricked, and they’re reluctant to bring attention to it by filing a lawsuit. Additionally, very few people are willing or able to take all of the time off work necessary to do everything they need to for a lawsuit. By the time a case gets to trial, the person has missed many days from work, even before the trial starts. Also, many lawyers are afraid or reluctant to take cases like this against a well-financed defendant who will get defense attorneys to try to drag things out, make things more labor-intensive than they should be, and generally throw up roadblocks at every possible turn.

If the car dealer in this case had only been required to pay $25,000 to the widow (the full amount of her compensatory damages), then the dealer would in essence have come out way ahead, and still would have profited by their fraud. They would’ve had a financial incentive to continue cheating people. If you rob 100 banks and only have to pay back one bank, why stop?

In a situation like this, assessing punitive damages is the only way to stop this type of fraud, whether by this car dealer or other car dealers. Punitive damages verdicts like this stand as a significant warning to both this dealership and other car dealerships that they cannot defraud our community.

Fearing Regulation, Financial Industry Group Begins TV Campaign To Convince Public That Government Wants to Make Loans Illegal

Posted On: November 19, 2015

I’ve written before about how big financial institutions are doing everything they can to attack the newly created government agency designed to protect consumers, called the “Consumer Financial Protection Bureau” or “CFPB.” My earlier article can be read here. In a nutshell, these financial institutions fear that the agency will actually be effective at protecting consumers from any overreaching and unfair tactics.

An industry group calling itself the “American Action Network” has begun a television advertisement campaign trying to convince people to believe the absurd notion that the consumer agency’s goal is actually to prevent people from getting loans. The campaign’s first big advertisement ran recently during a Republican Presidential Debate. The ad can be viewed on YouTube here.

The ad campaign does not appear to be working, because at the time of this writing, the YouTube video had 97 “thumbs up” and 918 “thumbs down” (full disclosure: One of those thumbs down was mine).

The New York Times recently ran an article concerning this ad campaign. That article, which was a follow-up to the Times’ series entitled “Beware The Fine Print” which highlighted the systemic unfairness of forced arbitration, can be found here. (That article contains links to the articles making up the “Beware The Fine Print” series.)

Here is the New York Times article:

Efforts to Rein In Arbitration Come Under Well-Financed Attack

By Jessica Silver-Greenberg and Michael Corkery – Nov. 15, 2015

A television ad during the Republican presidential debate last Tuesday depicted pale bureaucrats rubber-stamping the word “DENIED” on the files of frustrated Americans, beneath a red banner of Senator Elizabeth Warren evoking a Communist apparatchik.

The ad attacks the Consumer Financial Protection Bureau, a federal agency created with Ms. Warren’s strong backing after the 2008 mortgage crisis. What the ad did not say: Its sponsor wants to rein in the agency in part because of its efforts to restrict arbitration — the widespread practice in corporate America of requiring customers and employees to resolve disputes not in the courts, but in private proceedings with neither judge nor jury. In fact, arbitration is one of the reasons the ad’s sponsor, American Action Network, wanted to blast the agency with the $500,000 campaign, the group said.

The consumer agency’s stance on arbitration, while difficult to convey in a TV spot, “is a perfect example of how government is taking away the power of individuals and handing it to the trial lawyers,” said Mike Shields, president of the American Action Network and a former top aide at the Republican National Committee.

Last week’s ad is one of multiple efforts across the country in recent weeks by both advocates and opponents of arbitration to revisit the much-debated practice, which, in two powerful decisions beginning in 2011, has been affirmed by the United States Supreme Court. The most significant moves came in Washington, where regulators, lawmakers and the Justice Department pushed for new restrictions on arbitration.

At the same time, the U.S. Chamber of Commerce, the most powerful business lobby in the country, started a new effort to block the Consumer Financial Protection Bureau by lobbying lawmakers to attach a rider to the federal budget bill that would force the regulator to conduct a new study before issuing any rule, according to people with direct knowledge of the strategy.

“If the Chamber of Commerce thinks they are going to slip a provision into a spending bill that cuts off consumer rights without a fight, they are very much mistaken,” Senator Warren said.

Matt Webb, a senior vice president of the chamber’s Institute for Legal Reform, called the bureau’s work “deeply flawed and incomplete.”

The flurry of activity follows the publication by The New York Times of a three-part series showing how corporations across the spectrum of the American economy — phone companies, credit card providers, nursing homes — use mandatory arbitration to circumvent the court system and derail legal claims alleging predatory lending, wage theft, discrimination and other violations. The reporting detailed how arbitration proceedings tend to favor businesses over individuals. In some instances, arbitration clauses require disputes to be settled in Christian arbitration, a process governed by the Bible rather than state or federal law.

Proponents of arbitration, who say it provides an efficient alternative to courts, view the Consumer Financial Protection Bureau as among its biggest threats. They say a new rule proposed by the consumer agency, which would prevent financial services companies from including class-action bans in consumer contracts, could in effect kill arbitration altogether.

On Wednesday, the Justice Department issued a proposal to protect military service members from arbitration requirements. Earlier this month, Senator Al Franken, Democrat of Minnesota and a longtime opponent of arbitration, renewed his push for Congress to pass a bill he introduced this year that would prevent companies from requiring employees to go to arbitration.

Several Democrats are expected to introduce bills intended to more widely curtail the use of arbitration clauses, according to the people who knew of the strategy. But with Congress deeply divided, some Democrats are calling on President Obama to use his executive authority to prevent federal contractors from including arbitration clauses in their contracts with customers and employees.

San Francisco’s city attorney, Dennis Herrera, sued American Express this month over what he claimed were “illegal and anti-competitive rules, policies and practices.” The lawsuit, filed in Superior Court, will probably help small businesses whose contracts with the credit card company prevented them from filing a class-action lawsuit.

Marina H. Norville, a spokeswoman for American Express, said, “We don’t believe the suit has merit,” adding that the company planned to “vigorously” defend itself against it.

In Chicago, Alderman Edward M. Burke said he planned to introduce a bill this week that would prevent the city from doing business with companies that push employees and customers out of court. “It’s a way to get at a practice that is destroying a core American principle,” he said in an interview.

Arbitration has remained largely untouchable because of a pair of Supreme Court rulings in 2011 and 2013 that cleared the way for the use of class-action bans in contracts. With the current Supreme Court’s having now twice enshrined the wide use of arbitration, many opponents have pinned their hopes on the consumer agency’s proposed rule.

When the agency was created five years ago as part of the Dodd-Frank Act — the federal law overhauling the financial industry — it was given authority to study and create rules to address arbitration. The agency’s research shows, among other things, that businesses have tended to get bigger awards than consumers in arbitration.

In 2010 and 2011, businesses won arbitration claims against consumers totaling $2.8 million, the findings showed, compared with awards to consumers totaling less than $400,000. The agency’s findings formed the basis for its proposed rule, which was released in draft form last month.

The U.S. Chamber of Commerce and others have said the agency’s findings do not support its proposed rules. “By ignoring its own data that clearly shows major deficiencies with court-based litigation and disregards the real-world advantages of arbitration, the C.F.P.B. has demonstrated its bias for trial lawyers over average Americans,” Mr. Webb, of the chamber’s Institute for Legal Reform, said.

Considerable sums of money are at stake. Late last month, the bond-rating firm Moody’s Investors Service warned that if enacted, the bureau’s proposed rule might leave companies more vulnerable to class actions that could “force changes to company practices that cut into revenues” or “draw regulatory scrutiny.”

One reason arbitration advocates consider the bureau a significant threat is that it is empowered to issue rules without legislative approval, making them more difficult to defeat. Furthermore, unlike the Securities and Exchange Commission, which is overseen by a bipartisan commission, the consumer agency has a single head, appointed by the president.

At a legal summit hosted by the Chamber of Commerce late last month in Washington, participants spoke out forcefully against the consumer agency and its proposed arbitration rule. As attendees waited for one session to begin, Darth Vader’s theme song played on the sound system.

In his keynote speech on the virtues of free markets, John Stossel of the Fox Business Network lobbed a breast implant into the audience while discussing what he said was abusive litigation including lawsuits that involved claims of faulty implants. Mr. Stossel did not mention arbitration, but the subject came up during a session called Regulators Gone Rogue, in which a panelist cited the Consumer Financial Protection Bureau’s arbitration rule as an example of overreaching government oversight.

A chamber executive, introducing the panel, likened the chamber’s fight against regulations to the rebels’ revolt in the “Star Wars” movies. “Perhaps it is the real reason that Luke, Han, Leia and Chewie fought back against the evil empire,” he said.